04-001091BID M/A-Com, Inc. vs. Department Of Management Services, State Technology Office Status: Closed Recommended Order on Tuesday, May 25, 2004.

Summary: An Invitation to Negotiate is governed only by whether the agency is honestly attempting to get the "best value for the state."

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

M/A - COM, INC., )

)

Petitioner, )

)

vs. ) Case No. 04 - 1091BID

)

DEPARTMENT OF MANAGEMENT )

SERVICES, STATE TECHNOLOGY )

OFFICE, )

)

Respondent, )

)

and )

)

MOTOROLA, INC., )

)

Intervenor. )

)

RECOMMENDED ORDER

Administrative Law Judge Don W. Davis of the Division of

Administrative Hearings (DOAH) held a final hearing in the above

titled cause on April 26 - 27, 2004, in Tallahassee, Florida.

APP EARANCES

For Petitioner: Mark A. Hendricks, Esquire

Panza, Maurer & Maynard, P.A.

Bank of America Building, Third Floor

3600 North Federal Highway

Fort Lauderdale, Florida 33308

For Respondent: Gerard York, Esquire

Department of Management Services

4050 Esplanade Way, Suite 260

Tallahassee, Florida 32399 - 0950

For Intervenor: William E. Williams, Esquire

J. Andrew Bertron, Jr., Esquire

Huey, Guilday, Tucker, Schwartz

& Williams, P.A.

1983 C entre Pointe Boulevard, Suite 200

Post Office Box 12500

Tallahassee, Florida 32317 - 2500

STATEMENT OF THE ISSUE

Whether the State of Florida, Department of Management

Services, State Technology Office (Respondent) issued a Notice

of Intent to Award a contract, pursuant to an Invitation to

Negotiate (ITN), to Motorola, Inc., (Intervenor) which was

contrary to Respondent’s governing statutes, rules, polices, or

any applicable bid or proposal specification.

PRELIMINARY STATEMENT

Respondent iss ued ITN 009 in order to secure proposals from

vendors for the provision of services related to “an

interoperability network solution” for a statewide communication

system. Notice of Respondent’s action was posted on the

internet at www.MyFloridaMarketplac e.com .

On October 28, 2003, four vendors submitted responses to

the notice. On November 19, 2003, Respondent posted an initial

ranking and narrowed the field of four potential providers to

three. Negotiations with the three remaining vendors followed.

Following receipt of additional information from the

vendors and a series of meetings with each, Respondent posted a

Notice of Intent to Award. The notice contained the rankings of

the three finalists and documented Respondent’s intent to award

the cont ract to Intervenor. In points, M/A - COM, Inc.,

(Petitioner) was ranked last and Intervenor was ranked first.

On March 10, 2004, Petitioner timely filed a Notice of

Protest of the Notice of Intent to award to Intervenor.

Subsequently, on March 29, 2004, Pe titioner then filed a Formal

Written Protest. The matter was then referred to DOAH by

Respondent.

At the final hearing, the parties presented 39 joint

exhibits, which were received into evidence. Petitioner also

presented the testimony of four witnesse s and two additional

exhibits. Respondent and Intervenor presented no witnesses, but

did offer two additional joint exhibits that were admitted into

evidence.

A Transcript of the hearing was filed with DOAH on May 4,

2004. All parties filed Proposed Re commended Orders, which have

been reviewed and utilized in the preparation of this

Recommended Order.

FINDINGS OF FACT

1. On or about September 5, 2003, Respondent issued ITN

009 for a “interoperability” network solution to enable public

safety users of d isparate systems to have interoperability

between their various communications systems. Since the State

of Florida has no common radio communication technology for

public safety agencies, Respondent sought solutions, through the

ITN, that would permit fir st responders and other safety

personnel to integrate various disparate systems in time of

need.

2. By the response submission deadline of October 28,

2003, four vendors submitted replies to the ITN: JPS

Communications (Raytheon), Unisys, Petitioner, an d Intervenor.

3. The process of selecting one of the vendors proceeded

in three phases: an evaluation of replies phase, a presentation

phase, and a negotiation phase.

4. Five teams of evaluators (24 team members) from first

responder agencies around the state that will have to use the

system were appointed by Respondent to review and evaluate the

replies.

5. The evaluation team members met November 3 through 5,

2003, to begin the process. Each of the five teams evaluated

the replies and assigned scores to each proposer’s solution to

the problem. Respondent averaged the scores of the five teams

and assigned raw scores, not inclusive of costs, to vendor

proposals as follows: Raytheon, 72.0; Petitioner, 102.4;

Intervenor, 101.8; and Unisys, 58.2.

6. On November 19, 2003, Respondent posted the initial

ranking of vendors selected for further consideration.

Petitioner, Intervenor, and Unisys were selected to make

presentations regarding their proposed solutions. Petitioner

filed a protest with reg ard to the ranking, pursuant to

provisions of Section 120.57(3), Florida Statutes, but

subsequently withdrew that protest.

7. Following the presentations by the three vendors

(Petitioner, Intervenor, and Unisys), on December 2 and 3, 2003,

the evaluation teams again scored the vendors with the following

result: Petitioner, 105.33; Intervenor, 113.33; and Unisys,

85.66. Notice of the ranking of the three vendors was posted on

December 19, 2003. All three vendors were asked by Respondent

to continue into the final phase, negotiations.

8. Respondent formed a team of four negotiators, assisted

by a technical subject matter expert, to negotiate with the

three finalists. Numerous meetings of the negotiators were

convened to make a determination as to which proposed solution

constituted the “best value to the state.” During that time,

Respondent’s negotiators engaged in a discussion of vendor

replies; face to face negotiating sessions with vendors;

discussion of technical issues with the parties and technic al

experts; and discussions among themselves as a group.

9. Respondent requested all three remaining vendors to

submit “best and final offers” (BAFOs) on February 16, 2004.

10. All three vendors complied with Respondent’s request

and submitted BAFOs on February 18, 2004. Final prices were:

Unisys, $23,011,660; Intervenor, $23,026,742; and Petitioner,

$34,216,586. Based on those prices and the determination of

“best value” by the negotiating team, Respondent ranked

Intervenor as first choice; Unisys as second choice; and

Petitioner as third choice.

11. Respondent posted Notice of Intent to award the

contract to Intervenor on March 5, 2004. Respondent stated in

the notice that it would attempt to negotiate the contract first

with Intervenor; and, fai ling successful negotiation, proceed

next with the other finalists.

12. Petitioner filed a Notice of Protest on March 10,

2004, and requested formal administrative proceedings. By

operation of law, further negotiation between Respondent and

Intervenor was stayed. Intervenor filed a Petition to

Intervene, which was granted on March 29, 2004, following

referral of the matter to DOAH.

13. Petitioner alleges that Respondent used criteria and

an evaluation process that was inconsistent with the criter ia,

evaluation and process set forth in the ITN. Paragraph 4.11 of

the ITN is entitled “Evaluation Criteria” and outlines a broad

evaluation criteria to obtain “best value for the state” that

reads in relevant part as follows:

Technical Solution (50%): C riteria for this

part of the evaluation will be taken from

Tabs B and C including system design, local

system modifications, functionality,

security, standards, and ease of use. This

also includes implementation, system support

and administration, and tra ining.

Implementation, Support and Company

Qualifications (20%): Criteria for this

part of the evaluation will be taken from

Tab D.

Cost (30%): Criteria for this part of the

evaluation will be taken from Tab E.

14. During the first phase of the negotiation, the five

evaluation teams were permitted to score responses of vendors by

using information from anywhere in a vendor’s reply. Nothing in

paragraph 4.11 of the ITN specifies that Respondent score every

criterion in Tabs B, C, and D.

15. R espondent’s negotiation team had extensive

discussions on each proposal. Team members reviewed design,

implementation, and technology of each vendor’s solution to

insure that vendors had a full understanding of what was being

proposed. Although negotiati on team members discussed many of

the same criteria used by the evaluation teams, the score sheets

of the evaluators were not in front of the negotiators.

16. In the course of three days of negotiations,

Respondent’s team members asked vendors questions with the

intent of determining weaknesses and strong points in each

individual proposed solution. Consequently, Respondent

negotiators obtained valuable improvements and additions to the

vendors’ proposed solutions.

17. Notably, Respondent’s negotiation team obtained a

substantial reduction in price from Intervenor during the

process. Intervenor’s initial price for implementation and five

years of operation and maintenance of the system was

$39,953,341. In its BAFO, Intervenor reduced this amount to

$2 3,026,742. By contrast, Petitioner’s price increased from

$33,807,491 to $34,216,586 after the process.

18. Respondent’s negotiation team viewed the scoring and

rankings from the prior phases as an indication that the three

remaining vendors were quali fied to deliver the services sought

by the agency. Negotiators for Respondent did not rank vendors

until the very end of the process, after a review of all

information, and receiving the BAFOs. Scores from the prior

evaluation phase were not used to rank vendors in the

negotiation phase, but simply as a check or validation of the

negotiation team’s independent ranking. Each member of the

negotiating team arrived independently at the conclusion that

Intervenor’s solution presented the best value to the st ate.

19. No evidence was provided that scores from the reply

and presentation phases had any impact on the process beyond

qualifying vendors to participate in negotiations.

CONCLUSIONS OF LAW

20. The Division of Administrative Hearings has

jurisdic tion over this subject matter and the parties to this

action pursuant to Section 120.57(1) and (3), Florida Statutes.

21. Petitioner filed an Unopposed Motion to Amend its

Formal Written Protest on April 19, 2004. The motion was

granted at final hearin g.

22. Ruling upon Intervenor’s Motion in Limine for Order

Striking Petitioner’s Witnesses and Prohibiting Testimony, filed

April 22, 2004, was reserved at the final hearing. That motion

is denied at this time.

23. A confidentially agreemen t was entered into by the

parties on April 25, 2004. Under terms of the agreement, the

parties agreed to precautions against disclosure and

unauthorized use of confidential trade secret information

produced in this proceeding.

24. Petitioner has standi ng to challenge Respondent’s

proposed action to award the subject contract to Intervenor.

Additionally, Intervenor has standing to intervene in this

proceeding. § 120.57(1) and (3), Fla. Stat.

25. As the party challenging Respondent’s proposed action,

Petitioner has the burden of proof in this proceeding.

§ 120.57(3)(f), Fla. Stat.

26. Section 120.57(3)(f), Florida Statutes, provides, in

relevant part:

In a competitive - procurement protest, other

than a rejection of all bids, proposals, or

replies, the administrative law judge shall

conduct a de novo proceeding to determine

whether the agency's proposed action is

contrary to the agency's governing statutes,

the agency's rules or policies, or the

solicitation specifications. The standard

of proof for such proceedings shall be

whether the proposed agency action was

clearly erroneous, contrary to competition,

arbitrary, or capricious.

27. Petitioner has the burden of showing that Respondent’s

intent to negotiate a contract for the Interoperability N etwork

with Intervenor is contrary to the agency’s governing statutes,

rules or policies, or the ITN specifications. The proposed

award will not be overturned so long as the decision is based on

an honest exercise of discretion. Scientific Games, Inc. v.

Dittler Brothers, Inc. , 586 So. 2d 1128, 1131 (Fla. 1st DCA

1991).

28. The main thrust of Petitioner’s protest, relating to

the earlier evaluation process and not the result of the

negotiation process, is that Respondent failed to score all of

the indi vidual items in Tabs B and D of the ITN, thereby

increasing the relative weight to be given items in Tab C.

29. Petitioner’s argument is unpersuasive. Respondent

made three postings in this procurement. Petitioner did not

maintain any protest to the f irst posting and withdrew its’

protest to the second posting. Both first and second postings

by Respondent provided all parties a notice advising

substantially affected parties of a point of entry. Further,

Petitioner’s withdrawal of its protest followin g the posting by

Respondent of ranking on November 19, 2003, rendered moot any

further consideration of this issue.

30. Possibly, Petitioner misapprehends the difference

between a request for proposals (RFP) and an ITN. In an ITN,

the evaluation and rank ing of replies is only the first step in

the procurement. Following the evaluation and ranking of

replies in an ITN process, the agency “shall evaluate and rank

responsive replies against all evaluation criteria set forth in

the invitation to negotiate an d shall select, based on the

ranking, one or more vendors with which to commence

negotiations.” § 287.057(3) and (b), Fla. Stat. Petitioner was

ranked, selected for the negotiation process, and was not

substantially affected at that stage of the process.

31. Following negotiation in an ITN procurement, an

“agency shall award the contract to the responsible and

responsive vendor that the agency determines will provide the

best value to the state.” § 287.057(3)(b), Fla. Stat.

32. Petitioner has also argued that Respondent used scores

from the previous rankings in determining who was first, second,

or third in order for negotiation and that; accordingly, the

scores should be examined to determine their correctness. The

evidence is abundantly clear tha t Respondent’s negotiators

simply added the scores to the ranking process following their

unanimous and individual agreement that the Intervenor was their

first choice; Unisys was their second choice; and Petitioner was

their third choice. Absent a showin g that Respondent was not

engaged in an honest exercise to obtain the best value for the

state, Respondent was free to use whatever criteria in the

negotiation phase that it chose. See Scientific Games , 586 So.

2d at 1131.

RECOMMENDATION

Based upon the F indings of Fact and Conclusions of Law, it

is

RECOMMENDED:

That Respondent enter a final order denying Petitioner's

protest.

DONE AND ENTERED this 25th day of May, 2004, in

Tallahassee, Leon County, Florida.

S

DON W . DAVIS

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399 - 3060

(850) 488 - 9675 SUNCOM 278 - 9675

Fax Filing (850) 921 - 6847

www.doah.state.fl.us

Filed with the Clerk of the

Di vision of Administrative Hearings

this 25th day of May, 2004.

COPIES FURNISHED :

Gerard York, Esquire

Department of Management Services

4050 Esplanade Way, Suite 260

Tallahassee, Florida 32399 - 0950

Thomas F. Panza, Esquire

Panza, Maurer & Maynard, P.A.

Bank of America Building, Third Floor

3600 North Federal Highway

Fort Lauderdale, Florida 33308 - 6225

William E. Williams, Esquire

Huey, Guilday, Tucker, Schwartz

& Williams, P.A.

1983 Centre Point Boulevard, Suite 200

Post Office Box 12500

Tallahassee , Florida 32317 - 2500

Alberto Dominguez, Esquire

General Counsel

Department of Management Services

4050 Esplanade Way

Tallahassee, Florida 32399 - 0950

Foyt Ralston, Acting Chief

Information Officer

State Technology Office

Department of Management Ser vices

4030 Esplanade Way, Suite 115

Tallahassee, Florida 32399 - 0950

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within

10 days from the date of this Recommended Order. Any exceptions

to this Recommended Order should be filed with the agency that

will issue the final order in this case.